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Below the Street Q2 but in-line with our estimate. EBITDA got a $31m net boost from an adjustment to the receivable reserve.


  • Las Vegas:  In the short run, their high-end baccarat business is very volatile.  Last's year's results benefited to the tune of $150MM, and this year WYNN only won $38MM.  Hold was 37% last year in 2Q vs only 17% this year.
    • If you normalize for hold, then they would have done more business this year
    • The rest of the business in Las Vegas was flat 
  • Business levels in LV are slightly better than last year
  • In Macau, the market has gotten more competitive.  Generally speaking, the high end of the market was flat.  Wynn suffered a bit on the revenue side but not on the EBITDA. 
  • They have been able to hold the rate that they pay to junkets to 40% + 3% for comps which is about 5% less then the competition. They believe that they give away as much of their money to junkets as they can to maintain a good business.  Wynn is really concentrating on maintaining the bottom line. 
  • Growth in Macau has slowed down as the base has gotten bigger and to a greater extent because Asia is also experiencing similar types of macro pressures as the rest of the world
  • Wynn is improving their high limit slot business in Macau
  • Using credit as a marketing tool is a big mistake in the gaming business.  They will not buy business with credit. They are very conservative with granting credit and as a result, over the last 6 months, their collections have actually improved (which is why their results in Macau look so good - the reversal of the bad debt provision was $17MM in the quarter, 2/3rds of which benefited Macau vs. a charge)
  • Got a $2.3BN R/C and T/L for the construction of Wynn Cotai; interest rate will be under 2%.  The facility is expected to close in about 10 days.  


  • Doesn't think that the slowdown in Macau is driven by political issues.  The junkets are being responsible in extending credit.
  • No real change in the mix of direct vs. VIP
    • According to our calculation, direct dropped to 8.25% from 10% last Q
  • Cash balance: 
    • $500MM is at the parent
    • $600MM is in Macau
    • Balance in Las Vegas
  • Plan to spend about $150MM on foundation over the next 9-12 months.  Spent $140MM on Cotai so far - mostly on the land.
  • Only held 9% in baccarat this Q, adjusted for hold the quarter would have been $116MM in Las Vegas
  • The reserve reversal was 2/3rds in Macau and 1/3 Las Vegas
  • When SCC opened, they did see an impact on their property.  Folks got very aggressive around the opening. Aggressive incentives have extended into the Mass segment and not just the VIP segment and even in slot promotional allowances. 
  • Macau will continue to have cost pressures primarily surrounding payroll
  • Giving some of those under-utilitized tables to sub-junkets and eliminating some of the middle men. That way they end up giving the junket a better rate than they had elsewhere.  
  • Use of cash will be a very interesting topic for their board now that the financing for Cotai is lined up
  • What they are doing to grow revenue in Wynn Macau?
    • Expand retail space to 58,000 (10% increase) and sales there are really rocking.  They get 15% increases in all their new leases.
    • Someone is paying them $500,000/Q fixed for 2,000 SQFT of retail space
    • New junket room open by Christmas
    • Late in the June Q, moved Tiffany and then LVMH expanded into their space
  • While there is no change in credit worthiness in their client base, collections are slower on the direct side
  • What's their normal reserve for doubtful accounts, normally $14MM charge - so its the delta of $31MM peak to trough. They were 100% reserved in Macau at 150 days. So while collections have slowed, they collected better than they thought.  They changed their 100% reserve to 1 year from 150 days in Macau. In Vegas they changed the 100% reserve from 1 year to 18 months. 
  • As the amount of credit being issued in Macau ballooned with all the new properties, WYNN reserved more worrying about the market as a whole vs. just their own books. In hindsight, they were over-reserving for the last year or two.  At the end of 2011, their bad debt expense was 42% of their accounts receiveable.  Their reserve is 44% today.
  • They are going to increase the number of Mass tables they have on the floor in Macau
  • One of the reasons why it takes longer to collect is because players have outstanding debt at multiple casinos
  • They usually settle on the 5th day of each month with their junkets. They don't have a rolling program like their competitors.


  • Wynn Resorts reported revenue of $1,253MM and Adjusted EBITDA of $384MM
    • Macau: $908MM of net revenue and $302MM of Adj. EBITDA
    • Las Vegas: $345MM of net revenue and $82MM of Adj. EBITDA
  • Wynn Macau's EBITDA benefitted by a large reversal of doubtful accounts. This quarter Wynn had a $17MM reversal- most of which related to Macau.  
  • Wynn Cotai expected to cost between $3.5-4BN to construct
  • We estimate that direct VIP play at Wynn Macau was 8.25%
  • We estimate that the hold impact to Macau negatively impacted Wynn's net revenue by $21MM and EBITDA by $3MM
    • VIP:  If hold was in line with historical averages of 2.93% then net revenue and EBITDA would have been $30MM and $6MM higher
    • Mass: Wynn's mass hold for the last 5 quarters of 28.8% would have resulted in net revenue and EBITDA being $7MM and $3MM lower, respectively
  • In Las Vegas, table hold was only 15% compared to a 9 quarter average of 23.5%.  Had Wynn held at 23.5%, win would have been $49MM higher